Even before the coronavirus crisis, Ukraine did not lag behind in terms of the number of cashless and fintech projects and the speed of their development. Consumers of financial services have already received and repaid loans remotely, paid non-cash and online regular payments, received payment cards without visiting a bank, and used cashbacks for payments.
The coronavirus crisis has accelerated and made almost mandatory the transition of payments to non-cash, and customer consulting - to instant messengers and video applications. How to achieve a balance of financial interests between the payer and the service provider - a bank or a non-bank financial institution?
To answer this question, consider what these payment market participants are striving for. Payers, due to their basic behavioral qualities, want to receive payment services as simply and conveniently as possible, managing them from their smartphones online, and preferably free of charge. Moreover, they are already accustomed to receiving bonuses (cashbacks) for payments with payment cards. Service providers - banks and non-bank financial institutions - want to generate income not only from cross-selling in the provision of payment services, but also to make this line of business profitable.
It seems that it is impossible to meet the interests of all market participants at the same time. But you can try by significantly reducing costs and optimizing the processes of payment service providers, creating ecosystems based on cooperation and outsourcing, not only between banks, payment systems, non-bank financial institutions and logistics companies, but also involving sellers of goods / services, as well as state pension and social funds.
The National Bank of Ukraine has quite rightly determined that cheap non-cash is their priority and that they are working with banks to revise the cost of payments between customer accounts. But already at the moment, thanks to the technology and pricing policy of the SEP NBU, transfers of funds between clients' accounts in small amounts are inexpensive. Here the question is more about the financial literacy of the client and the motivation of bank managers to explain to the client the advantages of various options for transferring funds. Today, the cost of non-cash transactions for individuals differs depending on the types of transactions and transfer methods:
Another part of the regular consumer demand for payment services is monthly payments for housing and communal services, mobile communications, the Internet, television, and repayment of loans. In this segment, the situation with processes and tariffs is generally strange. For example, almost all utilities of housing and communal services at the local level are "covered" by local settlement centers, which provide technological interaction of these enterprises with banks and other financial institutions in the process of organizing the collection of payments for their services. The intentions seem to be good - to standardize and optimize the IT function in utilities. But, as a rule, these settlement centers take all the commissions of utilities provided in their budgets to pay collection of payments. And banks and other financial structures that directly accept these payments, forced to either charge a commission from the payer, or again, in the fight for the client, subsidize this service at the expense of other services (mainly credit limits). Whatever it was - the final consumer of the service pays for everything!
The National Bank of Ukraine, as part of the optimization of settlement processes in the state, began a discussion about the standardization of payment receipts, and, accordingly, billing systems (interfaces) of enterprises in the housing sector. But the efforts of only the NBU and participants in the payment market are not enough here. To optimize these processes, and therefore to reduce the cost of services for the end payer, it is necessary to interact with the Ministry of Community and Territorial Development of Ukraine and the Ministry of Digital Transformation to develop and implement uniform technological and tariff standards for housing and communal services enterprises and settlement centers that serve them.
Another very important part of non-cash settlements of individuals is payments by payment cards for products, goods and services, the volumes of which are growing from quarter to quarter, including thanks to the history of cashback. It is no longer a secret for anyone that the source of cashbacks is the merchant's acquiring commission (that is, merchants now pay banks 1.5-2% for acquiring services) and / or, again, subsidizing this customer loyalty by a banking institution at the expense of income from other services ... But on the Ukrainian market, legislative preparations have nevertheless begun to reduce the interbank commission rate (interchange) for payments by payment cards in the retail network from today's 1.6-1.7% to 0.5%, which, accordingly, should reduce the commission of merchants to about 1 %.
This is a controversial issue that raises various points of view in the professional environment. But every cloud has a silver lining, and in these changes it is also necessary to look for opportunities. Now merchants have a feeling that they are sponsors of customer loyalty to banks that provide cashbacks, and that, at the expense of merchants, first of all, cashless and NFC settlements are advancing so rapidly in Ukraine. If merchants pay “fair” acquiring prices, they will be even more willing to participate in co-branding promotional cashback programs for various target customer groups. And ultimately, with the direct interaction of merchants with banks and the use of individual offers for certain groups of customers (retirees, students, schoolchildren, athletes, doctors), cashbacks for customers who are paid by payment cards can become even higher.
Thus, there are two options for further development: to continue subsidizing the payment business at the expense of other operations, as well as to shift all inefficiencies to the payer, increasing the commission for payments, or to reorient from competition to cooperation and thereby make the processes in the payment field of Ukraine as optimal as possible. I hope that the current crisis will push us towards the second option.
The coronavirus crisis has accelerated and made almost mandatory the transition of payments to non-cash, and customer consulting - to instant messengers and video applications. How to achieve a balance of financial interests between the payer and the service provider - a bank or a non-bank financial institution?
To answer this question, consider what these payment market participants are striving for. Payers, due to their basic behavioral qualities, want to receive payment services as simply and conveniently as possible, managing them from their smartphones online, and preferably free of charge. Moreover, they are already accustomed to receiving bonuses (cashbacks) for payments with payment cards. Service providers - banks and non-bank financial institutions - want to generate income not only from cross-selling in the provision of payment services, but also to make this line of business profitable.
It seems that it is impossible to meet the interests of all market participants at the same time. But you can try by significantly reducing costs and optimizing the processes of payment service providers, creating ecosystems based on cooperation and outsourcing, not only between banks, payment systems, non-bank financial institutions and logistics companies, but also involving sellers of goods / services, as well as state pension and social funds.
The National Bank of Ukraine has quite rightly determined that cheap non-cash is their priority and that they are working with banks to revise the cost of payments between customer accounts. But already at the moment, thanks to the technology and pricing policy of the SEP NBU, transfers of funds between clients' accounts in small amounts are inexpensive. Here the question is more about the financial literacy of the client and the motivation of bank managers to explain to the client the advantages of various options for transferring funds. Today, the cost of non-cash transactions for individuals differs depending on the types of transactions and transfer methods:
- within the bank between the accounts of individuals in almost all banks, transfers are free;
- small interbank non-online transfers from individual accounts, market-leading banks also make it possible to make for free;
- transfers using the mechanisms of the IPS VISA and Mastercard, the so-called card-to-card transfers, which are carried out online, cost the client at the level of 1-2% plus about 5 UAH. However, some market leaders also make them free of charge for retail customers.
Another part of the regular consumer demand for payment services is monthly payments for housing and communal services, mobile communications, the Internet, television, and repayment of loans. In this segment, the situation with processes and tariffs is generally strange. For example, almost all utilities of housing and communal services at the local level are "covered" by local settlement centers, which provide technological interaction of these enterprises with banks and other financial institutions in the process of organizing the collection of payments for their services. The intentions seem to be good - to standardize and optimize the IT function in utilities. But, as a rule, these settlement centers take all the commissions of utilities provided in their budgets to pay collection of payments. And banks and other financial structures that directly accept these payments, forced to either charge a commission from the payer, or again, in the fight for the client, subsidize this service at the expense of other services (mainly credit limits). Whatever it was - the final consumer of the service pays for everything!
The National Bank of Ukraine, as part of the optimization of settlement processes in the state, began a discussion about the standardization of payment receipts, and, accordingly, billing systems (interfaces) of enterprises in the housing sector. But the efforts of only the NBU and participants in the payment market are not enough here. To optimize these processes, and therefore to reduce the cost of services for the end payer, it is necessary to interact with the Ministry of Community and Territorial Development of Ukraine and the Ministry of Digital Transformation to develop and implement uniform technological and tariff standards for housing and communal services enterprises and settlement centers that serve them.
Another very important part of non-cash settlements of individuals is payments by payment cards for products, goods and services, the volumes of which are growing from quarter to quarter, including thanks to the history of cashback. It is no longer a secret for anyone that the source of cashbacks is the merchant's acquiring commission (that is, merchants now pay banks 1.5-2% for acquiring services) and / or, again, subsidizing this customer loyalty by a banking institution at the expense of income from other services ... But on the Ukrainian market, legislative preparations have nevertheless begun to reduce the interbank commission rate (interchange) for payments by payment cards in the retail network from today's 1.6-1.7% to 0.5%, which, accordingly, should reduce the commission of merchants to about 1 %.
This is a controversial issue that raises various points of view in the professional environment. But every cloud has a silver lining, and in these changes it is also necessary to look for opportunities. Now merchants have a feeling that they are sponsors of customer loyalty to banks that provide cashbacks, and that, at the expense of merchants, first of all, cashless and NFC settlements are advancing so rapidly in Ukraine. If merchants pay “fair” acquiring prices, they will be even more willing to participate in co-branding promotional cashback programs for various target customer groups. And ultimately, with the direct interaction of merchants with banks and the use of individual offers for certain groups of customers (retirees, students, schoolchildren, athletes, doctors), cashbacks for customers who are paid by payment cards can become even higher.
Thus, there are two options for further development: to continue subsidizing the payment business at the expense of other operations, as well as to shift all inefficiencies to the payer, increasing the commission for payments, or to reorient from competition to cooperation and thereby make the processes in the payment field of Ukraine as optimal as possible. I hope that the current crisis will push us towards the second option.
